Three Ways Michiganders Buy Before They Sell
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
Everywhere else these three structures trade off cost against flexibility. In Michigan one of them also costs you a tax exemption, which changes the ranking.
Carry both payments, then recast
Buy with ordinary financing, carry both payments through the overlap, and apply the sale proceeds to principal afterwards, asking the servicer to recast.
In Michigan this is the structure the statute was practically written for. The departing home stays vacant and listed, which is exactly what MCL 211.7cc(5) requires, so the principal residence exemption survives on both properties for up to three tax years. The departing home also keeps its capped taxable value until it transfers.
And the overlap being carried is short. Grand Rapids 22 days, Lansing 25, Muskegon 27, Detroit and Ann Arbor 32. For many households the carry is measured in weeks.
Borrow against the equity you already have
If income alone will not carry both payments, equity is the next lever, and it is fully compatible with the rescission. Recording a lien against the departing home does not make it occupied, leased or used for a business purpose, so none of the four conditions is broken.
That is worth knowing, because owners sometimes assume any change to the property's financing jeopardises the exemption. It does not. What jeopardises it is a tenant. See line versus term.
Keep the departing home and rent it
This is the structure that collides with Michigan's benefit, and it collides backwards.
If the property subject to a conditional rescission is leased, the local tax collecting unit shall deny the rescission, and the denial is retroactive to December 31 of the year immediately preceding the lease. Signing a tenant in August costs the exemption for that whole tax year.
It can still be the right answer, particularly where the departing home cash flows strongly. It should simply be priced with the lost exemption in the comparison rather than treated as a free fallback. Detail on the rental conversion page.
The federal rules also narrowed. For applications dated on or after November 1, 2026, Fannie Mae B3-3.8-05 takes gross market rent times 75%, subtracts that property's PITIA, and treats a positive result as an offset against that property's own payment rather than as qualifying income.
How the choice gets made
| If this is true | Usually points to |
|---|---|
| Income covers both payments | Carry both and recast, exemption intact |
| Income close, equity strong | Financing against the departing home, exemption intact |
| Departing home cash flows strongly and you accept the trade | Rental conversion, exemption given up |
| Thin equity and tight income | Selling first, and we will tell you that |
Start with the Michigan guide.
Your real estate agent handles the purchase itself and your local assessor administers the exemption. We handle the financing: what you qualify for, how the equity gets used, and what the payment looks like on both houses.
Frequently asked questions
Does taking a bridge loan affect my Michigan principal residence exemption?
No. The four conditions in MCL 211.7cc(5) are that the previous home is not occupied, is for sale, is not leased and is not used for any business or commercial purpose. Recording a lien against it does not breach any of them.
Which structure is cheapest in Michigan?
Carrying both payments and recasting, where income supports it. It adds no financing cost, and it keeps the departing home in exactly the condition the conditional rescission requires, so the principal residence exemption survives on both properties.
Is renting the old house ever the right answer in Michigan?
Sometimes, where the property cash flows strongly enough to outweigh the lost exemption. The point is to price that trade rather than discover it. Leasing ends the conditional rescission retroactively to December 31 of the preceding year.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Principal residence exemption eligibility and conditional rescission rules depend on your facts; your local assessor, your CPA or a Michigan attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.